We are in the midst of the holiday season and buying a new Myrtle Beach home or refinancing your current mortgage may be the last thing on your mind. However, if you are one of the fortunate that have equity in your home, this may be a good time to refinance or consider selling your home and either upgrading to a larger home or downsizing if you children have moved to their own homes. There are several pieces of legislation on the floor of Congress that may affect the housing market in 2013 and now is a good time to take a close look at your mortgage situation.
Regardless of whether you are refinancing your mortgage or buying a new home, your financial institution will require that you lock in a rate on the total amount needed no later than 5 days before your closing date.
This is referred to as a mortgage rate lock and it guarantees the interest rate for a specified period of time which will determine the length of time you have before settlement. You will want to make the time long enough to ensure you are not scrambling t meet the requirements and not add more costs to the closing.
Myrtle Beach Home Mortgage Rate Lock
Black Friday was yesterday and many folks in Myrtle Beach were out looking for great deals. The same holds true when you are shopping for a mortgage and comparing rate locks.
- A 15 Day Lock – will provide a rate at the lowest cost. For this short term lock, the mortgage loan will need to be approved by an underwriter.
- A 30 Day Lock – this is the most common lock and can be done before the actual approval of the loan.
- A 45 Day Lock – is used with transactions that take longer such as new construction loans and can be obtained whether or not the loan is already approved.
- A 60 Day Lock – used under circumstances where there may be a longer period between the approval of the loan and the closing. Out of state borrowers will often seek this type of lock to allow for travel time.
The shorter the time period of the lock the better interest rate for the borrower since the lender has less risk.
As mentioned, the longer the rate lock period, the higher the interest rate and this can vary as much as .25 percent.
The mortgage holder is taking more risk with longer periods such as the 45 or 60 day lock and the cost of closing may increase. For example, if the rate today is 3.25% on a 30 year fixed mortgage for a 30 day lock, the rate may rise to 3.50% for a longer rate lock. This will add a significant amount to the interest you pay over the length of the mortgage for your Myrtle Beach home.
There may be an extension fee built into the agreement if you take longer than anticipated. If the actual transaction takes 32 days rather than the 30 day rate lock period, there may be a ½ discount point added to the loan amount. On a $300,000 mortgage this would mean an additional $1,500.
Shop Around For Myrtle Beach Home Mortgage
Just like shopping for those great Christmas gift bargains, you will want to shop around for a mortgage lender. Never be afraid to let the lenders know that you are comparison shopping and that you are open to locking in an interest rate if it is reasonable and fair. This keeps the financial institution competitive.
Every lender is regulated by tight restrictions from Freddie Mac and Fannie Mae which means that simply locking in an interest rate for a Myrtle Beach home does not guarantee that your loan will be approved. Making sure that your lender has all of your financial data will help improve the odds of actually being approved and going to closing on time.
When working with mortgage companies send your income and asset information and credit history to ensure that you actually qualify for the amount of money you are seeking. Then get a rate quote upfront and make sure that the overall payment is one that you can live with.
Jerry Pinkas Real Estate Experts have been serving the Myrtle Beach are for over ten years. They know real estate and how to best sell or buy a home or condo. Give us a call at 843-839-9870 we will be happy to help you with any real estate transaction.
Jerry Pinkas Real Estate Experts
604 N. 27th Ave Myrtle Beach, SC 29577